Palantir Technologies (PLTR) and Salesforce (CRM) effectively became software’s standard-bearers against Wall Street’s “SaaSpocalypse” narrative over the past month.
Investors had been spooked by the notion that AI might hollow out traditional software businesses for much of 2026. However, according to Seeking Alpha data, Palantir surged 51% during August, while Salesforce climbed nearly 40%. Over the trailing three months, the stocks shot up nearly 22% and 28%, respectively.
Jim Cramer says the reversal wasn’t accidental and has a pointed explanation for what changed their fortunes.
The comeback was remarkably striking, though, as both stocks entered August as 2026 laggards.
Palantir was punished despite the rapid AI-led demand, while Salesforce remained trapped under questions about sluggish subscription growth and whether generative AI might erode its seat-based model.
Then earnings overwhelmed the narrative. Palantir posted 93% Q2 sales growth and raised its full-year outlook as U.S. government and commercial demand accelerated. At the same time, Salesforce beat quarterly expectations by a substantial margin, raised its annual forecasts, and expanded its partnership with Anthropic.
Still, Cramer believes earnings are only part of that turnaround.
His more fleshed-out argument ties company execution to a broader market force that continues distorting software valuation, then abruptly goes into reverse.
Cramer sees more than earnings behind the software comeback
On the Aug. 31 episode of “Mad Money,” Jim Cramer argued that the August rallies in Palantir and Salesforce reflected a combination of improving fundamentals and the unwinding of an aggressive anti-software trade.
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Cramer traced that pressure to Situational Awareness, a leveraged hedge fund that once controlled $45 billion and bet against enterprise software names, as Forbes reported, assessing that AI might potentially render established platforms obsolete.
When its positions soured and the fund imploded, the selling pressure that weighed down the group disappeared. “Once that hedge fund blew up, the whole group came roaring back,” Cramer argued.
The unwinding, though, was supported by fundamental strength.
Palantir, in particular, was up more than 50% in August as its quarterly results challenged doubts about its valuation and growth prospects. Cramer pointed to its revenue-growth and profit-margin score of 155, soaring above the Rule of 40 benchmark.
“I don’t know how you sell something with that kind of profitable growth,” he said.
Moreover, Salesforce’s nearly 40% rally offered a second test. Marc Benioff attacked the “SaaSpocalypse” narrative, and a blowout quarter, Cramer said, “obliterated the shorts.”
Other SaaS stocks, such as Veeva Systems, jumped 40%, while ServiceNow advanced 33% after layering AI into its business.
So the recovery was not exactly a company-specific squeeze, but rather a broader reassessment of the narrative that AI will kill software.
Cramer’s AI playbook is getting more selective
Cramer separates the wheat from the chaff when it comes to AI, backing stocks of companies with defensible platforms, monetization, and bottleneck control.
Nvidia is still central to that thesis.
Cramer dismissed OpenAI’s Jalapeño chip as a threat, saying that a specialized accelerator cannot easily replace Nvidia’s sticky software ecosystem and tremendous developer loyalty. Nevertheless, despite enormous demand, capacity and politics could limit sales.
His preferences of late reveal discipline. Cramer named Alphabet his favorite stock, Gokhshtein reported, and he also cited Search, Gemini, Google Cloud, YouTube, and Waymo. On top of that, he favored Lam Research, KLA, and Applied Materials, as memory scarcity makes chip-manufacturing equipment a major picks-and-shovels route into AI spending.
At the same time, the software side of his thesis has shifted immensely.
After Workday’s results, Cramer said on X (the former Twitter) on Aug. 28 that the feared “SaaSpocalypse” still hadn’t arrived and that Salesforce’s growing Anthropic partnership backs that view. It showed that AI models can become a lot more useful when linked to a company’s customer data, security systems, and daily workflows.
Palantir makes a similar case by enabling businesses to effectively use AI to make real-world decisions. For Cramer, though, strong earnings and proven benefits matter a lot more than AI hype.
Cramer’s rebound call raises the bar for software stocks
Cramer’s argument shifts the debate from whether “AI will destroy SaaS” to which businesses could turn it into durable earnings. That helps the sentiment, but it doesn’t eliminate the pricing risk.
Palantir Technologies trades at nearly 98 times forward earnings and 44 times forward sales, according to StockAnalysis, leaving hardly any room for error. Cramer’s Rule of 40 defense somewhat supports the remarkable premium, but merely meeting estimates might not prevent multiple compressions.
At the same time, Salesforce faces a lower hurdle. It trades near 18 times forward earnings and 4.4 times forward sales, with a 7% free-cash-flow yield. Investors still price Salesforce like a mature vendor, though.
If Agentforce and Anthropic accelerate organic growth, the stock could potentially re-rate on Palantir-like performance. If growth stays near 11%, August’s rally might have captured much of the improvement.
Another major narrative involved Palantir CEO Alex Karp sharpening Microsoft CEO Satya Nadella’s criticism that companies are paying twice for AI.
Karp argued that frontier labs can efficiently absorb the “alpha,” while customers receive limited value.
Palantir’s sovereign-AI approach aims to prevent that leakage. Its software connects external models to customer data under strict permissions, without retraining those models on that data, Tom’s Hardware noted. This makes Palantir valuable, regardless of which model wins.
For broader software, Cramer’s take underscores a split market. Companies that are controlling trusted data and essential workflows will continue to benefit from AI.
Those offering replaceable features might still deserve an AI-disruption discount over the long term.
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